Former JPMorgan exec sued over $2 million Cantor Fitzgerald loan

January 24, 2014|Karen Freifeld | Reuters

(Mike Segar Reuters, )

NEW YORK (Reuters) - Irvin Goldman, who briefly oversaw risk at JPMorgan Chase & Co during the "London Whale" derivatives debacle, is being sued for non-payment of a $2 million loan he received while working for Cantor Fitzgerald & Co.

Goldman joined Cantor Fitzgerald in 2003, according to a lawsuit filed by CF Notes that was transferred to a New York state court in Manhattan this week.

CF Notes, a Cantor affiliate, issued the loan to Goldman in 2006 on the condition that he pay it back upon leaving the firm.

In 2007, Goldman resigned from Cantor, and he has not made any principal or interest payments, the lawsuit said.

In 2010, Cantor Fitzgerald paid a $250,000 fine to settle a disciplinary proceeding for failing to supervise an executive who, in 2006, was trading the same stocks in his personal account and a firm proprietary account. The firm neither admitted nor denied wrongdoing. The settlement identified Goldman by title but did not name him.

Joanna Hendon, a lawyer for Goldman, did not immediately return a call for comment. In court papers, Goldman said CF Notes tried to recover too late, and that the statute of limitations is six years from the date of the note.

Goldman, who joined JPMorgan Chase after leaving Cantor, resigned from the bank in July 2012. He had been named chief risk officer of the Chief Investment Office that lost billions in the "London Whale" derivatives trades in early 2012, around the time problems began to mount. The trades, which ultimately lost $6.25 billion, took on the "London Whale" nickname that hedge funds gave to the London-based trader who put on the exceptionally large positions.

Robert Hubbell, a spokesman for Cantor Fitzgerald, declined to comment.

The case was filed in Westchester County in December and transferred this week to Manhattan, where the complaint also had been filed.

The case is CF Notes LLC v. Irvin Goldman, New York State Supreme Court, Westchester County 67754/2013. The New York County case is No. 159670/2013.

(Reporting By Karen Freifeld; additional reporting by David Henry in New York; Editing by Bernard Orr)